Type II deiodinase (DIO2) is thought to provide triiodothyronine (T3) to the nucleus to meet intracellular needs by deiodinating the prohormone thyroxine. DIO2 is expressed widely in many tissues and plays an important role in a variety of physiological processes, such as controlling T3 content in developing tissues (e.g., bone, muscles, and skin) and the adult brain, and regulating adaptive thermogenesis in brown adipose tissue (BAT). However, the identification and cloning of DIO2 have been challenging. In recent years, several clinical investigations have focused on the Thr92Ala polymorphism, which is closely correlated with clinical syndromes such as type 2 diabetes, obesity, hypertension, and osteoarthritis. Thr92Ala-DIO2 was also found to be related to bone and neurodegenerative diseases and tumors. However, relatively few reviews have synthesized research on individual deiodinases, especially DIO2, in the past 5 years. This review summarizes current knowledge regarding the physiological functions of DIO2 in thyroid hormone signaling and adaptive thermogenesis in BAT and the brain, as well as the associations between Thr92Ala-DIO2 and bone and neurodegenerative diseases and tumors. This discussion is expected to provide insights into the physiological functions of DIO2 and the clinical syndromes associated with Thr92Ala-DIO2.